We recently had the chance to catch up with Infosys' Sourcing and Procurement (S&P) BPO group to learn about recent developments in the sourcing and procurement operations areas. In many ways, it seems that the areas driving 2011 growth are a useful proxy for the broader procurement BPO market in many ways. From a number of logical global expansions in current accounts to new platform BPO relationships encompassing source-to-pay technology and services combined to a range of more targeted deals, the diverse set of relationships driving Infosys' expansion in the area appear to approximate the development of other activities Spend Matters is observing in the procurement BPO marketplace. We can lump these into three categories, below.

First, organizations are often starting more targeted BPO relationships (e.g., select categories, select transactional services, select geographies) before expanding into broader engagements with their respective BPO partners. Second, BPOs appear to be moving further and further away from "on the menu" items to service more and more diverse requests (the growth of supplier management services from on-boarding and data collection/validation is a useful window into the evolving world of more specific requests and procurement organization needs). And third, technology and platforms appear to be playing role in driving organizations to embrace a more comprehensive type of BPO approach that goes beyond FTEs, category and process knowledge.

This is especially true in the P2P area inclusive of eProcurement, but we are also seeing technologies play key roles across the broader source-to-pay continuum. Many platform BPO providers like Infosys continue to act more and more like an automotive OEM (i.e., focused on final assembly and fit and finish) for best-of-breed technologies. Yet Infosys layers the assembly with their own proprietary tools in the areas of workflow management, analytics, benchmarking and performance management -- not only selecting and configuring solutions tied to their own preferred practices when they sign up to achieve an outcome as part of an engagement, but also integrating them in a pre-configured manner where necessary (both technically and from a process-driven perspective) to reduce implementation risk and accelerate results. It's important to note here that integrations can range from extremely loosely coupled (i.e., run a series of reports and mash them together in the same briefing deck) to real-time calls into both client systems of records and other Infosys procurement BPO platform tools.

In today's technology, Infosys remains partnered with SAP and Ariba for platform BPO and procurement. They also leverage technology from BIQ and Ariba for spend analysis and Paetec for telecom expense management. Flexera is Infosys' partner in software asset management as part of the broader BPO and category management solutions BPO offering. Spend Matters believes the next stage of maturity in the technology/platform area for leading procurement BPO providers will be a blending of best-of-breed partnering with organic solution development and. As we see greater platform vs. platform competition between BPOs as key differentiators in deals, the basis of competition will likely evolve to the level of highly specific industry and category configurations that a BPO can achieve outside of core P2P for direct spend. This is a topic we will continue to explore in separate posts and papers at a later date. But it's highly plausible that BPOs differentiating on certain spend categories like complex services will offer highly customized platforms -- still allowing of client-specific configuration -- to enable the true outsourced management of results inclusive of initial savings, ongoing performance management and sustainable cost reductions over time.

Outside of technology alone, the trends Infosys shared with us map quite well to these three hypotheses around key market developments. Consider some of Infosys' new wins as an example. In the procurement area, Infosys is starting in a targeted geographic and functional manner to work with a global pharmaceutical company by providing sourcing and category management services in the Central & Eastern Europe, Middle East & Africa (CEEMA) region. In another new relationship, a platform BPO relationship became the key driver for a source-to-pay transformation including technology, hosting, maintenance support and BPO services. Business process and transformation services layered on top of the technology deployment, management and support were also part of this engagement.